Marijana No Comments

UK house prices grow at slowest rate for six years

UK house prices grew at their slowest annual rate in six years in September, a closely-watched gauge has revealed, as Brexit uncertainty continues to smother activity in the sector.

House prices grew by just 1.1 per cent over the last year, undershooting economists’ expectations of a rise of 1.6 per cent, Halifax’s house price index showed today. Prices rose at an annual rate of 1.8 per cent in August.

Month on month, UK house prices fell by 0.4 per cent in September, down from 0.2 per cent growth in August. The monthly figure also dropped below economists’ expectations of a 0.1 per cent rise.

Russell Galley, managing director of Halifax, said that although the 1.1 per cent annual growth is the lowest since April 2013, it “remains in keeping with the predominantly flat trend we’ve seen in recent months”.

“Underlying market indicators, including completed sales and mortgages approvals, continue to be broadly stable. Meanwhile for buyers, important affordability measures – such as wage growth and interest rates – still look favourable.”

“Looking ahead, we expect activity levels and price growth to remain subdued while the current period of economic uncertainty persists.”

Housing is just one market that has been subdued by political uncertainty in Britain. Potential buyers and sellers are putting off their decisions until there is more clarity over Brexit.

Halifax said today that recent surveys show a flatter trend in demand and lower mortgage approvals in recent months.

The UK housing market has also been hit by a global economic slowdown that has weighed on asset prices. First-time buyers will be cheered by the news that houses are not rocketing in price, however.

Andrew Montlake, managing director of UK-wide mortgage broker Coreco, said: “As we approach Halloween and the Brexit endgame it’s no surprise price growth is slowing, but the horror show many predicted hasn’t played out.”

“Extremely low borrowing costs continue to make property affordable while the strength of the jobs market is giving people confidence amid the chaos.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said low levels of activity was forcing mortgage lenders to “work incredibly hard to generate business and stand out from the competition”.

“This is excellent news for borrowers and once buyers return to the market, when the uncertainty is removed from the equation, there are some extremely competitive products for them to take advantage of.”

By Harry Robertson

Source: City AM

Marijana No Comments

House prices fall in rare September slump

Rightmove has revealed that UK house prices have decreased for the first September since 2010 as the usual autumn rebound failed to transpire.

The average price of UK property coming on the market fell by 0.2%, or £730, to £304,770, as the number of agreed sales dropped 5.5%. Underlying housing fundamentals remain strong, yet the October 31st Brexit deadline and the prospect of no-deal have discouraged buyers.

Miles Shipside, Rightmove director, said the approaching deadline was “causing some to hesitate”. If it lasts, the traditional autumn bounce in completions may be “missed altogether”.

Excluding London, the UK housing market has been somewhat resilient since the 2016 referendum. House prices in London have been in decline since March 2018, but that has been explained by a reduced interest from international buyers. Other regions have remained resilient against uncertainty.

The Rightmove figures have indicated that the intensity of no-deal Brexit concerns are impacting the larger market.

Mr Shipside said: “As the deadline gets closer and tensions heighten, there has been a big swing with sales agreed now over 5 per cent below those of a year ago. Buying activity is still at nearly 95 per cent of what it was a year ago, but sellers in all regions are seeing fewer sales go through.”

People selling property are also holding back, but prices continue to fall. The number of newly-marketed properties decreased by 7.8% this month compared with last year, with all regions down on the previous year, Rightmove found.

The most recent Office for National Statistics (ONS) data shows prices increasing 0.9% across Britain in June, but falling by 2.7% in London, continuing a trend since March 2018. Prices in the south-east decreased by 0.6% in the same month.

A total of 53% of homes were taken off the market in the most exclusive boroughs of central London instead of sold in the second quarter of the year, according to Lonres. The figure has risen gradually since 2014, when it ranged between 30 and 40%.

Marcus Dixon, head of research at Lonres, said that changes to stamp duty and the uncertainty surrounding the EU referendum in 2016 had hit the market. He said: “Indeed, since 2016 more properties have been removed from the market due to a withdrawal than a sale.”

Source: Scottish Housing News

Marijana No Comments

UK house prices remain stagnant as no-deal Brexit looms

UK house prices grew at less than one per cent for the ninth month in a row in August, Nationwide figures revealed today, prompting calls for Boris Johnson to slash stamp duty.

The value of homes did not grow between July and August, Nationwide’s House Price Index found.

But they did grow 0.6 per cent on an annual basis and 0.3 per cent over the last three months.

However, UK house prices slipped to an average price of £216,096 in August, down from July’s £217,663.

Nationwide warned that Brexit uncertainty is weighing the market down despite healthy economic signals.

“While house price growth has remained fairly stable, there have been mixed signals from the property market in recent months,” Robert Gardner, Nationwide’s chief economist, said.

No-deal Brexit threat weighs down UK house prices
While mortgage approvals have been stable and new buyer enquiries have improved, UK consumer confidence slumped in August as a no-deal Brexit looms.

The threat of Brexit uncertainty will continue to cloud the UK housing market, Gardner added.

“Housing market trends will remain heavily dependent on developments in the broader economy,” he said.

“In the near term, healthy labour market conditions and low borrowing costs will provide underlying support, though uncertainty is likely to continue to exert a drag on sentiment and activity.”

Howard Archer, chief economic adviser to the EY Item Club, added: “With the economy struggling and the outlook currently highly uncertain, we suspect that house prices will remain soft despite the recent pick-up in housing market activity – which could well prove temporary.”

Could Boris Johnson cut stamp duty?
Prime Minister Boris Johnson is yet to announce his domestic agenda since he took power in July, but he is reportedly considering slashing stamp duty to boost UK house prices.

This couldn’t come soon enough, according to experts, who believe it would help lift housing stock supply and boost house price value as Johnson takes the UK closer to a no-deal Brexit.

Guy Harrington, chief executive of property lender Glenhawk, said: “The need for more stock is as urgent as ever and the government would be foolish not to address stamp duty relief as a priority.”

Archer added: “Housing market activity – and possibly to a lesser extent prices – could be given a lift in 2020 if the government cuts stamp duty significantly in the Budget later this year.”

Kevin Roberts, director of the Legal & General Mortgage Club, added: “The critical issue is that there are simply not enough homes to meet the demand from consumers, whether people buying their first property or those who want to downsize.”

By Joe Curtis

Source: City AM

Marijana No Comments

Liverpool sees biggest decline in house prices since 2008

Liverpool has seen the highest drop in house price value since 2008 in England and Wales, according to the latest research by GetAgent.

GetAgent investigated Middle Layer Super Output Areas (MSOAs) and compared the average house price change for these areas since the financial crisis.

Using MSOA area codes, the research revealed that the 023 area of Liverpool saw the biggest drop in value with a decline of 44.21% from £116,821 to £65,178.

The 044 area of Bradford, 005 area of Hartlepool and parts of County Durham also saw declines in house price value.

Colby Short, founder and chief executive of GetAgent.co.uk, said: “While we tend to focus on top-line statistics the UK housing market is made up of thousands of micro-markets and so what is happening in one area can be the polar opposite to another.

“Looking at these more granular levels of data provides an interesting insight that differs from the usual blanket, generic observations and demonstrates how even in the same city, the market can perform differently from one area to the next.”

London saw major growth in house prices since 2008 with Camden (022) and Lambeth (003) seeing growth of 389.82% and 322.74% respectively.

In Greater London, the 010 area of Cambridge (156.71%) and 008 area of Winchester (149.11%) have also experiences high house price growth.

Short continued: “Currently, we’re seeing the London market struggle with other major cities in the Midlands and further north enjoying stronger price growth.

“However, looking at the long-term picture since the financial crisis, we can see a real contrast across the different areas of the UK with the capital flourishing overall, while other macro-areas have experienced really difficult recoveries.”

By Jessica Nangle

Source: Mortgage Introducer

Marijana No Comments

UK house prices suffer surprise July fall as housing market ‘treads water’

UK house prices continued to “tread water” in July as they slipped 0.2 per cent month on month, Halifax warned today.

However, annual growth rose 4.1 per cent thanks to the housing market’s poor performance in 2018, the bank’s latest house price index found.

Russell Galley, managing director of Halifax, said: “The average UK house price fell slightly for a second month, as the market continues to tread water with marginal increases or decreases in each monthly period.

“That said, it’s worth remembering that while economic uncertainty continues to weigh on the market, the overall trend actually remains one of comparative stability, with average prices down by less than £600 over the last three months.

Halifax said a drop off property sales in the early months of summer raises the spectre of a possible downturn.

But Galley added: “New buyer enquiries are up, and favourable mortgage affordability – driven by low interest rates and strong wage growth – should continue to underpin prices for the time being.

“In the longer-term, we believe there is unlikely to be a step change in market activity until buyers and sellers see some form of resolution to the current economic uncertainty.”

Summer slump or Brexit paralysis?
Marc von Grundherr, director of estate agent Benham and Reeves, asked: “Are we seeing a further indictment of Brexit paralysis? Or is this a seasonal blip given that the summer months simply tend to see lower demand?”

He believes the drop was the latter, adding: “For the UK property market to have seen year on year growth of over four per cent despite the best endeavours of our politicians to de-rail public sentiment, has to be viewed as at least resilient – perhaps even astonishing.”

Buyers look ‘beyond Brexit’
Jeremy Leaf, north London estate agent and a former Royal Institution of Chartered Surveyors residential chairman, said the latest figures show buyers are “looking beyond Brexit”.

“Prices are being underpinned by shortage of stock, improving affordability and low mortgage rates,” he added.

“What is more important is the number of transactions, which remain sluggish and protracted as sellers reluctantly come to terms with new market realities.”

Property lender MT Finance said the market is “flat” with house prices continuing to fall, but said the decline was “relatively small”.

“However, there is a risk that come the autumn, the robustness of the property market will be put to the test,” director Joshua Elash added.

“If Brexit or deflationary forces lead to the Bank of England increasing the base rate, there will be consequential pressure on homeowners to sell as they struggle to deal with meeting the cost of increased mortgage payments.

“In this scenario we would expect to see more significant downward pressure on prices.”

By Joe Curtis

Source: City AM

Marijana No Comments

How lifetime mortgages support younger generations

Since the beginning of 2019 we have seen a distinct rise in the value over 55-year olds are releasing from their properties to help their loved ones.

Our data shows that the average loan now sits at over £110,000, up a quarter compared to 2018, when it was just over £85,000. In fact, loans taken out to gift money to family are now the largest of all. Nearly one in five of the mortgages taken with us in 2019 are for this purpose.

There are a number of factors driving this trend, the first being that families are using the substantial growth in the value of their property over the years, to help the younger generations get onto the housing ladder.

According to recent studies, UK house prices have increased from around £180,000 in 2013 to around £248,000 in 2018, a 40% increase while earnings have risen by just 11% over the same period.

Add to this new research from Zoopla that found the average city-dwelling Brit needs to earn £54,400 a year to buy their first home, it is no surprise that parents and grandparents are choosing to free up money for their own properties to help their younger relatives get onto the housing ladder.

The second factor driving this trend is so parents and grandparents can pass on a potential inheritance earlier.

The rise in life expectancy is causing wealth to move down generations at a much slower pace.

As demonstrated by the ONS intergenerational wealth transfer report, currently people aged 55 to 64 are the most likely age group to receive inheritance, which is when most people are typically more financially stable and less in need of the extra cash.

For parents and grandparents seeing younger family members thrive financially and in particular get on the property ladder is a milestone they want to see them achieve.

Lifetime mortgages are increasingly enabling families to help each other and share their wealth over the generations, which in turn is helping boost the economy and in particular the housing market.

The third factor contributing to this trend is product innovation, which has made lifetime mortgages more accessible for those wanting to gift money to their children or grandchildren.

For example, many lifetime mortgages have the option to make voluntary repayments of up to 10% of the initial loan amount each year, or to pay off up to 100% of the interest, because of this we have seen a number of parents who have taken equity from their property to help their children and then the children make the interest payments.

By making payments the interest on the loan is reduced and any remaining inheritance is protected.

Lifetime mortgages are boosting the economy by enabling homeowners over 55 years old to spend funds that would have otherwise been tied up for years to come.

The range of lifetime mortgages available also means that more homeowners than ever can access the funds in their property.

We will continue to evolve our lifetime mortgages to ensure we can provide products to meet the everchanging needs of consumers.

By Nici Audhlam Gardiner

Source: Mortgage Introducer

Marijana No Comments

UK house prices are stuck in the doldrums

UK house prices are set to tread water while incomes rise, making property more affordable, says Merryn Somerset Webb.

The numbers aren’t looking good for residential property investors. House price growth in the US fell to a mere 1% at the beginning of this year, according to the latest report from the Dallas Federal Reserve. Look at global data across the 18 largest economies in the world and things don’t look much more encouraging. This could be the year in which we see “global growth dip to its lowest pace in a decade”. Investment is slowing fast, says Oxford Economics.

The UK is no outlier here. The Nationwide index and the Rightmove Asking Prices index show prices and asking prices respectively to be all but flat. The Halifax House Price index shows a better annual number but suggests prices fell mildly in June. You can see the same trend in Hometrack data, which suggests that the falling prices we have seen in London are beginning to spread: over a third of homes are now in areas with annual price falls (the higher value the market the more likely this is), although the absolute levels of falls is small. So what next? Most analysts expect the market to tread water from here (at best) – although if a new PM were to pull a Brexit deal from the hat we could of course see a little London bounce.

A flat market…
This is probably correct. There is still some support for prices. Housing starts are falling slightly (so the supply of housing is not rising much). Interest rates are low and will go lower if Brexit goes horribly wrong. The banks’ wholesale funding costs have also edged down, and that should soon feed into mortgage rates. At the same time wages have jumped (year-on-year growth excluding bonuses hit an 11-year high in April) and household disposable incomes are also on the up.

That makes houses – even at today’s silly prices – seem more affordable. Prices, says Nationwide, are likely to be at least supported by “healthy labour market conditions and low borrowing costs.” That said, there isn’t much to push prices up either. They are still high relative to incomes. The tax and regulatory hit to buy-to-let is discouraging buyers in that market. An unwelcome (to big property owners, at least) overhaul of property taxation may be on the way. And the Help to Buy scheme (which has played a clear part in pushing prices up) is likely to be at least scaled back soon. Put all those factors into the mix and it is hard to see a rebound in prices in 2019 “or beyond” says Capital Economics.

… is good news
The key thing to bear in mind there is that this is not bad news – unless you very recently paid too much for a house. One thing we have all agreed on in the UK for decades now is that houses are too expensive relative to average earnings. That makes it tough to get on the ladder and tough to move up the ladder. Add today’s high levels of stamp duty to your cost of buying and it’s nasty out there.

But the fact that house prices are not really rising in nominal terms, combined with the small real rise in wages over the last two years, is beginning to change this situation. In 2007 Nationwide’s house price to earnings ratio for the UK was 5.42. At the end of 2016 it was 5.25. Today it is 5.03 times. That’s not ideal – but if this gentle drift down continues and we end up at more like four times, it will suddenly be an awful lot easier to buy (and sell) houses. That would be a very good thing.

Head for Hampshire
Nevertheless, for those of you determined to find the next hot location in the property market and make your fortunes the easy way, Anne Ashworth writing in The Times has an idea for you. She suggests checking out age profiles. Why? Because the younger the crowd, the higher the potential for growth. In areas with an older demographic, you can expect to see sales and downsizing (the cash from which then gets spread around children and grandchildren who won’t necessarily live in the area). In one with a younger demographic you can expect to see the opposite.

Look back over the last decade, says Lucian Cook of Savills and you will see this in action. Those areas with large concentrations of people in their 40s have seen much greater price appreciation (up 56%) than elsewhere. With that in mind, look at somewhere such as Aldershot in Hampshire. There 39% of households are headed by someone between 31 and 40. They won’t be downsizing any time soon.

By: Merryn Somerset Webb

Source: Money Week

Marijana No Comments

UK house prices surge 5.7 per cent in June

UK house prices shrank by 0.3 per cent in June compared to the previous month, according to data released today.

But the growth rate rocketed 5.7 per cent on an annual basis last month, according to Halifax’s latest house price index, to take the average UK house price to £237,110.

That compares to May’s £237,837, when Halifax recorded an annual growth rate of 5.2 per cent – the best in two years until today’s figures.

Russell Galley, managing director of Halifax, said: “This extends the largely flat trend we’ve seen over recent months.

“More generally the housing market is displaying a reasonable degree of resilience in the face of political and economic uncertainty.

“Recent industry figures show demand looking slightly more stable, with mortgage approvals ticking along just above the long-term average.”

However, he warned that a “major restraining factor” for the UK housing market was the lack of houses up for sale.

“With the ongoing lack of clarity around Brexit, people will be looking for more certainty in the coming months, both to encourage them to list their property and to create the confidence needed to encourage buyers,” Galley added.

“Of course, the likelihood of continued historically low mortgage rates will underpin prices in the near term.”

Halifax figures are a ‘complete outlier’
Howard Archer, chief economic adviser to the EY Item Club, dismissed Halifax’s data as a “complete outlier in annual terms”.

It compares to Nationwide’s annual growth rate of just 0.5 per cent in June and Office for National Statistics (ONS) data of 1.4 per cent growth for April.

“There are signs that housing market activity may have got a little help from the avoidance of a disruptive Brexit at the end of March, but the overall benefit looks to have been limited,” Archer said.

“Improved consumer purchasing power and robust employment growth has also recently been helpful for the housing market but this has recently shown some signs of levelling off.”

Meanwhile, former Royal Institution of Chartered Surveyors (Rics) chairman, north London estate agent Jeremy Leaf, also questioned the figures.

“It paints a confusing picture with the annual house price increase actually greater than it was last month while comparative figures from 12 months ago are also unreliable,” Leaf said.

Buyers ‘looking beyond Brexit’
Leaf added that Brexit uncertainty has softened UK house prices, with today’s figures likely to dampen buyers’ appetites as prices continue to fall.

However, he said that many buyers have stopped delaying purchases and are pushing ahead with house hunts even amid the political uncertainty hitting the market.

“We are finding that some buyers, including some investors, are looking beyond Brexit and political uncertainty and are prepared to go ahead if they can perceive value,” he said.

Brian Murphy, head of lending for Mortgage Advice Bureau, said: “The market trend continues to follow a similar direction of travel to the one that we’ve observed since the beginning of this year; those who need to move are doing so, regardless of politically-driven news headlines, and are far more likely to make the decision to purchase based on their own circumstances should the need dictate.

“The availability of competitive mortgage products is also providing many with support, as lenders remain very much ‘open for business’ with some repricing downwards of late in order to gain more traction in the market.”

What will UK house prices do after Brexit?
EY’s Archer predicted that even in the event of a Brexit deal, the UK’s prolonged departure from the bloc will hamper growth of UK house prices over 2019.

The accounting giant predicts prices to rise only around 1.5 per cent this year.

“Prolonged uncertainty will weigh down on the economy and hamper the housing market,” Archer said.

“Consumers may well be particularly cautious about committing to buying a house, especially as house prices are relatively expensive relative to incomes.”

While a lack of homes on the market and very low interest rates should prop up the market in the meantime, Archer warned the nature of Brexit will dramatically impact UK house prices.

With a deal, house prices could grow by around two per cent over 2020.

But in a no-deal Brexit, Archer warned house prices could “quickly drop” by as much as five per cent.

By Joe Curtis

Source: City AM

Marijana No Comments

UK house prices near record high for new homes on market

UK house prices for newly-marketed properties neared a record high this month, spurred on by a cluster of UK regions shrugging off recent political uncertainty.

Four northern regions witnessed their highest ever asking prices in June, pushing property prices nationally up 0.3 per cent to just £91 below June 2018’s record figure of £309,439.

According to Rightmove, the regions of East Midlands, the North West, Wales and Yorkshire & the Humber all enjoyed record asking prices.

That is despite newly-marketed houses in the capital falling in price by an average of 0.4 per cent this month.

“More buoyant markets in the north and midlands are helping to nudge up prices due to the seemingly relentless strength of buyer demand,” said Miles Shipside, Rightmove director and housing market analyst.

“Buyers in four regions are seeing higher new seller asking prices on average than ever before.”

In London, Shipside blamed a combination of stretched affordability, moving costs including stamp duty and Brexit uncertainty for the 0.4 per cent drop in the capital, where prices in June have fallen for the last three years.

Brian Murphy, head of lending at the Mortgage Advice Bureau, said: “The complex current market dynamic is driven by varying levels of consumer sentiment.

“One might suggest that those areas which are seeing more ambitious asking prices are somewhat insulated from the ongoing turbulence at Westminster – that or buyers and sellers in those areas are opting to ignore the headlines and carry on regardless, according to their personal circumstances.”

The scale of the UK’s housing problems were underlined this morning, with new research showing that less than one in 10 towns offer affordable property for nurses, teachers, paramedics, police and firefighters.

Some eight per cent of towns offer affordable housing for key public sector roles, tumbling from 24 per cent five years ago.

Central London remained the least affordable area, while the top three most affordable towns in Britain for key workers are all in the north west.

Halifax, which produced the results, said the gap is due to UK house prices outpacing earnings growth for public sector workers.

Average house prices have risen by 32 per cent compared to key worker average annual earnings growth of seven per cent.

By Sebastian McCarthy

Source: City AM

Marijana No Comments

UK house prices show biggest annual rise since Jan 2017 – Halifax

UK house prices rose at the fastest annual rate since the start of 2017 during the three months to the end of May, mortgage lender Halifax said on Friday, though it added the figure was flattered by weak growth a year ago.

Halifax said house prices in the three months to May were 5.2% higher than in 2018, up from 5.0% annual growth in the three months to April, their highest since January 2017 and beating a forecast in a Reuters poll of economists.

Britain’s housing market has slowed since 2016’s Brexit referendum, driven by price falls in London and neighbouring areas, exacerbated by higher purchase taxes on homes costing over 1 million pounds ($1.27 million) and on second homes and small landlords.

Halifax said prices rose 0.5% on the month in May, in contrast to predictions of a fall, and April’s monthly house price growth was revised up to 1.2% from 1.1%.

“The overall message is one of stability,” Halifax managing director Russell Galley said.

“Despite the ongoing political and economic uncertainty, underlying conditions in the broader economy continue to underpin the housing market, particularly the twin factors of high employment and low interest rates,” he added.

Since the start of this year, Halifax house price data have been consistently stronger than figures from rival mortgage lender Nationwide, which reported annual price growth of just 0.6% in April.

The most recent official data showed house price inflation of 1.4% in the year to March, and Pantheon Macroeconomics economist Samuel Tombs said he expected price growth to remain around this level for the rest of this year..

“Households’ real incomes still are rising at a solid rate, while the recent decline in interest rate expectations should reduce mortgage rates soon,” he said.

Reporting by David Milliken; Editing by Alistair Smout

Source: UK Reuters